US Stocks Climb; Energy, Tech Gain As Risk Appetite Returns

KristinaPeterson

NEW YORK (MarketWatch) -- U.S. stocks rose broadly Thursday as actions from the Chinese and Spanish governments boosted hopes that the euro zone debt crisis may not escalate.

In the latest wave of volatile market swings tied to the oscillations of the euro, stocks jumped Thursday as the news from overseas lifted sentiment and the euro reversed some of its recent losses. As fears of stunted global demand eased, investors' risk appetite returned, sending shares of energy, financial and technology stocks higher.

The Standard & Poor's 500-share index rose 2.3%, climbing above 1090, a level it struggled to hold in the previous session. Investors said the measure's ability to stay above 1090 would suggest Thursday's rally could become a sustainable move upwards and not just the latest sharp market swing.

"We're having a nice little tug-of-war between some pretty solid economic fundamentals, great corporate fundamentals and all these world issues that investors think the effects might spread," said Jeff Layman, chief investment officer at BKD Wealth Advisors. The market's recent volatility has spooked retail investors, in particular, he said.

"They're going to tend to take a much more conservative and cautious approach, which might mean a quicker reaction to sell stocks at the first sign of bad news than they would in other environments," Layman said.

But on Thursday, the latest international reports sent the euro climbing and stocks soaring.

The Dow Jones Industrial Average surged 214 points, or 2.1%, to 10193, returning above the 10000 level after it had closed below it Wednesday for the first time since early February. All of the Dow's 30 components were in the black, with its technology components in the lead.

Microsoft jumped 5.2%, erasing some of its Wednesday losses, when the software giant's market capitalization slipped below rival Apple's. Intel climbed 4.3% and Hewlett-Packard rose 2.3%. Apple, which is not a Dow component, was up 2.5% recently.

Among the Dow's other top performers, General Electric climbed 3.7% and American Express climbed 3.7%.

Wal-Mart Stores edged up 0.8% after its Asda Group unit reached a deal to buy the U.K. operations of deep discounter Netto FoodStores in a deal valued at $1.1 billion.

The Nasdaq Composite surged 2.7%. Within the S&P 500, the energy and technology stocks led the measure higher as risk appetite returned.

The gains in the energy sector came as crude-oil futures rose above $74 a barrel. In addition, American depositary shares of BP jumped 7.2% after the U.S. Coast Guard, which is overseeing the disaster response in the Gulf of Mexico, said the company's "top kill" maneuver had successfully prevented oil and gas leaking from the well.

The euro rose to $1.2287 after the China State Administration of Foreign Exchange, the agency that manages the nation's reserves, said media reports that it is considering selling some of it holdings of euro-zone government bonds were "groundless." The U.S. stock market had slid in late trading Wednesday in a lapse that coincided with a report in The Financial Times that China was mulling such sales.

Also boosting the euro, the Spanish government passed EUR15 billion ($18.29 billion) of additional budget cuts this year and the next.

As investors' anxiety ebbed, safe-haven assets fell. The U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, declined 0.5%. Treasurys dropped, lifting the yield on the 10-year note up to 3.34%. However, gold futures edged up.

The action came despite slightly disappointing U.S. economic data. The Commerce Department revised its estimate of first-quarter gross domestic product down to a 3.0% annual rate January through March. In the government's original report on first-quarter GDP, it estimated an increase of 3.2%. Economists surveyed by Dow Jones Newswires had expected the estimate would be revised up to 3.4%.

Separately, the number of U.S. workers filing new claims for unemployment benefits fell last week, though the drop was smaller than expected.

Among stocks in focus, Tiffany jumped 5.8%. Tiffany's fiscal first-quarter earnings more than doubled as the luxury jewelry retailer saw demand rebound across most of its markets.

Citigroup's shares rose 4.2% after the Treasury Department cut its stake in the bank to about 22% from 27%, selling 1.5 billion shares for about $1.32 billion and hedge-fund manager Bill Ackman said at a conference Wednesday that he bought 150 million of the bank's shares.

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